Top Tips For Reducing Your Credit Card Debt

The following is a guest post by John, who works in financial management specializing in credit cards for bad credit.  He’s a keen blogger and has written several pieces on how to improve credit rating.

Millions of people in the UK use one or more credit cards and they’re an extremely popular form of payment throughout the rest of the World.

It’s easy to see why too; credit cards are an extremely convenient and easy method of payment. They can be used to purchase good or services either in stores or over the Internet, withdraw cash from bank machines, and can even be used as an easy form of identification. With added competition for credit cards, a myriad of incentives, loyalty schemes, and reward schemes are available with most credit cards, with the majority of them also offering insurance covering your purchases.

But whilst credit cards are handled well by some (usually using them in emergencies or utilizing the tips outlined below), they represent a dangerous way into financial difficulties as a worrying amount of people slip into unmanageable credit card debt.

This article is a guide looking at some of the steps you can take to manage and reduce your credit card debt, whilst improving your credit ratings at the same time. You will need patience and a lot of organization but it is more than possible for anyone to control their credit card debts.

Keep Up With Your Payments

The first point I want to make it that you should always try keep up your scheduled credit card repayments. If you can keep up your repayments on a regular basis you’ll be taking a huge step to improving your credit rating.

Make sure you’re aware of how long your payment will take to clear; cheque payments and some bank transfers will take a few days to clear, you need to take this into account in order to have your payments considered ‘on time’ by the credit card companies.

Should you miss your repayment date, you’ll be charged a penalty fee (which varies depending on the company), which will simultaneously make your financial management more difficult and lower your credit rating.

Pay More Than the Minimum

Secondly, do your best to pay more than the minimum amount required each month. You don’t need to be drastic, but making sure your payment exceeds the minimum required will mean you pay less in the long term (due to interest), get into a good financial management habit and improve your credit score.

Don't Exceed Your Limit

The next point is probably the most important for effectively managing your credit card debts; don’t EVER exceed the fixed credit limit dictated by the credit card company. It will create a bad financial habit and will add to a mounting debt that has the potential to spiral into serious financial difficulties.

Should you exceed your credit limit, you’ll be charged a penalty fee that will increase both your minimum repayment for the next month and the amount you have to pay in interest. Consistently going over your credit limit will result in a lowered credit rating, which can often be hard to recover from.

It might be a wise step to figure out what would be a sensible credit limit for you, then contacting the credit card company and requesting that they lower your credit limit. This is particularly advisable if they suddenly increase your credit limit, as this creates a heavy temptation to overspend.

Budget

The last tip is an important, albeit fairly general one. You need to get used to properly managing your monthly budget. Keep a proper track of what you spend, noting down exactly what you spent it on. You might well be surprised at what you’re spending your money on every month and if you can get a strong idea of your spending habits, you’ll have a far better chance of cutting down your monthly outgoings.

I’ll give you a fairly simple example, last month I saw I was buying a bottle of water every day on the way to work at 69p per bottle. This worked out to an average of £13.80 for 20 bottles. A quick trip to a local supermarket and I found 8 bottles of Evian mineral water on a ‘buy one get one free’ offer, priced at £1.91. I bought two 8 packs which gave me 32 bottles of water (enough for one every day of the month, plus a couple left over), for £3.82, giving me an overall monthly saving of £9.98.

As I said, it’s a fairly simple example but it shows you how you can cut down your monthly spend with a little forethought and organization, and those savings really add up in the long run.

8 Money-Saving Credit Card Hacks

The following guest post was written by Alban, who is a regular writer at Credit Card Finder.

Oftentimes the best credit card hacks are hidden to us because we didn't even know they existed. While some of these perks are clearly stated in the small print of your credit card agreement, a lot of these are only available to those who dare to ask.

1. Can't pay your bill this month? Delay it:
If you have a good existing credit rating with your lender and suddenly find yourself in a situation that won't allow you to pay off your credit card this month, call your lender at once and explain the situation. Then ask for an extension of another 30 days to pay the bill. Chances are that if you have a good standing with your lender, they will agree and give you some slack.

2. Need more credit? Increase your limit:
If you have an upcoming holiday where money and plenty of funds are essential, then why not ask for a credit limit increase. A great sneaky tactic to get your increase approved fast is if you plan on making a larger purchase like buying a TV or renovating your home.

3. Bargain for a lower interest rate:
The easiest way to do this is by telling your lender you're considering a better offer from the competition. Be friendly and not accusing while bargaining. It will get you much further.

4. Paid late? Waive the fee:
Sometimes circumstances are out of your hands. You might lose Internet connection while paying your bill online and suddenly find yourself in a situation where you get charged a late fee because the bill wasn't paid on time. In those moments, you might be able to request a fee being removed from your account because it wasn't your fault.

5. Merchant surcharges removal:
This is more interesting for US consumers as some states prohibit the addition of credit card surcharges. In Australia, this is perfectly legal if the merchant is within reason, e.g. to cover excess costs.

6. Warranty matters:
When you pay for large purchases with your credit card, the lender might match your warranty. This saves you from having to pay for extended warranty periods. Check with your lender to be sure.

7. Consider renting a car?
You might be eligible for free rental car insurance: It is worth checking this with your card provider because you can easily save a few hundred dollars in the process of hiring a car for a longer holiday.

8. Are you missing out on freebies?
You might qualify for free hotel accommodation, free upgrades and the likes with your credit card's rewards program. It pays to check because some of these freebies are worth hundreds of dollars. Join Perkler to search for your loyalty program and find out all the perks and discounts you are eligible for.


Crystal's Note:  I like the fact that my Discover has the optional perk of paying $69.95 for any road side assistance.  I haven't used it, but I like to know I have a backup option.

Do you know of any other credit card hacks? 

The Fun Stuff in My Budget

Today, Mr Credit Card from www.askmrcreditcard.com is going to talk about the fun things in his budget. He has also compiled his thoughts on the best credit cards offers available today if you looking for one. Hope you enjoy this post

Your budget serves many purposes. The most obvious one is to plan how much you intend to spend your money on different things. Budgeting is such a useful tool to know where your money goes and helps you decide where to put your limited resources to good use. However, very often, budgeting feels like to drag especially if you are looking to reduce debt or squeezing every cent to make ends meet. But as the title of this blog suggest, budgeting can be fun too! So in this post, I would like to touch on some of the fun things that I budget and plan for in our household's budget.

Saving For Vacation - This one is a biggie for us. We take a couple of family vacations every year. And we try to see different places each year. Our budgets for vacation vary every year depending on the circumstances. Normally, we have to save for airline tickets and hotel bills plus the usual meals and attractions if we intend to do the "Disney type stuff". Since vacations can be "relatively big ticket items", we do a few things to try to save money. For example we earn airline miles with our airline credit card. We book any airline tickets months in advance. We are also constantly searching for deals (which I guess is the fun part).

Budgeting for kids extra cirricular activities - We have three kids. All play baseball (softball for the girl). All play soccer. So there is always costs like new gears (cos they outgrow what they wore last year) and equipment. Our daughter also takes ballet lessons which she loves and two of our kids take piano lessons.

Sports Tickets - This year, we are going to get some season tickets for the Phillies and our new soccer team, the Philadelphia Union. I find that taking my kids to games is a really good bonding sessions. The kids really enjoy it too. I have found that getting season tickets is cheaper than just buying them before the game.

Gifts for Mrs Credit Card - Birthday, Anniversary, Christmas - Too be honest, buying gifts for Mrs Credit Card can be fun but stressful (hey, you know what I mean). I find that anniversary and birthday presents are most stressful. But yet at the same time, Mrs Credit Card does not like surprises. So she normally tells me what she wants. And we actually end up debating if it is a good buy and then put it in the budget!

Gadget purchases - I find that every year, I always buy some form of gadgets. Four years ago, I got Mrs Credit Card an iPod for her birthday (this one was a total surprise). Then the year after that, I got her an iPhone. Then last year, I got myself an iPhone. This year, we got the business a laptop. And we've got a couple of computer the last couple of years for the business as well.

The fun part of budgeting for these is that we actually do research on the stuff we intend to buy. That means spending time surfing the net for information (or you could call that time wasting). This year, we are thinking of getting a TV for the bedroom (perhaps 3D Plasma!!). I know most folks say it is a bad idea, but Mrs Credit Card and myself really like to veg out in front of the TV after putting the kids to bed.

House Renovations - This is not an annual thing. But for anyone that has bought an older home, or even a new home that was not really done up properly, you will know that there always seems to be a project to work on. Whether it is painting the walls, installing a new bathtub, changing curtains, or simply landscaping the garden, it costs money - and sometimes lots of it. But budgeting for these things can be fun too. After all, most of us take great pride in our homes. This year, we will not have any projects on the house. But the previous years, we had a deck installed and had our driveway repaved and extended.

What Are the Fun Stuff In Your Budget? - So there you have it - some stuff in my budget. What are some the stuff you have fun planning in your budget? Though I do spend quite a bit on these things, they are things I enjoy doing or in my opinion are worth spending on (ok - perhaps the house renovation is something I do not really enjoy!)

Let's Get Controversial - Credit Cards

I’ve decided to use this week to get through some of the controversial issues I see on other blogs.  I’m simply going to post my opinions and see what you think.

Today’s topic:  Credit Cards *cue scary music*

Let’s just rip off the Band-Aid, I love using credit cards for as much as possible, getting my rewards, and paying them off a few days after I receive my emailed statements.  It makes my super-anal budgeting system so much easier.  I like getting cash back rewards.  Oh, and I hate debit cards, but that’s my own fault.  I’m old school…I actually keep up with every single checking account debit and credit in a check book.  Writing down hundreds of tiny charges does not sound like fun to me.

I got my first card when I was 18.  I’ve never been in credit card debt.  I’ve never received a fee or any interest charges.  If you are addicted to spending or cannot control yourself with a credit card, PLEASE DON’T USE THEM.  Otherwise, why the heck not?!

We have a Discover More card, a Discover Open Road card, and a World Points MasterCard.  We use the Discover More card for everything possible except car expenses, the Discover Open Road card for car stuff like gas, and the MasterCard for anybody that doesn’t accept Discover.  These are the rewards we received in 2009:

Discover More = $263.26 cash back for $21,570 spent (1.22%)
Discover Open Road = $59.18 cash back for $1895 spent (3.12%)
Mastercard = $105.95 cash back for $10,595 spent (1%)
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So in all, I earned $428.39 with purchases of $34,060 for a return of 1.26%.

Rewards will not make us rich, but I was going to make all of these purchases anyway.  For example, $8500 of our MasterCard total was for graduate school expenses…I love the fact we got anything back from that!  Yes, there are higher paying rewards cards - check out this Free Money Finance post and comments or the countless other posts online – but I like Discover.  No hard and fast reason, but I’m pretty loyal until a company ticks me off or I can really clean up by moving on.

I also love being able to purchase discount gift cards using Discover cash back.  Do you know how many of our friends and family are Starbucks addicts?  Tons!  Do you know how many of them have birthdays?  All of them!  I love being able to get a $50 Starbucks gift card for $45…I turn around and use it to buy two $25 gift cards and that’s two adults that will be super happy not to receive socks.  No, I’ve never actually gifted socks before, but you get the point.

Ok, what do you think?  Do you use credit cards?  Why or why not?